New Zealand GDP

New Zealand

New Zealand: GDP expands at solid pace in Q4; services sustain growth

March 19, 2015

In the fourth quarter of 2014, GDP increased a seasonally-adjusted 0.8% over the previous quarter, which marked a slight deceleration over the 0.9% expansion observed in Q3. The print exceeded market expectations of a milder 0.7% expansion. Compared to the same quarter of the previous year, GDP increased 3.5% in Q4 (Q3: +3.2% year-on-year). In the full year 2014, GDP expanded 3.3%, coming in above 2013’s 2.3%, and marking the largest gain in seven years.

Q4’s quarterly expansion was mainly driven by the services sector and, to a lesser extent, by manufacturing. Goods producing industries slowed from Q3’s 0.6% expansion to a 0.3% rise in Q4. The manufacturing industries expanded 1.0% in Q4 (Q3: +1.9% quarter-on-quarter) and construction activities rebounded from Q3’s 1.4% contraction to a 0.3% increase in Q4. Conversely, electricity, gas and water swung to a 2.5% contraction (Q3: +0.5% qoq). Growth in services sped up from 0.3% in Q3 to 0.9% in Q4. All of the five sub-sectors of the services category expanded at a faster pace compared to Q3. Retail trade and accommodation recorded the largest expansion among these sub-sectors, growing at the fastest pace since Q3 2011, followed by public administration as well as financial and insurance services.

On an expenditure basis, GDP grew 1.1% over the previous period in Q4, matching Q3’s print. The print reflected that an improved performance of the external sector offset slower investment and consumption growth. Total consumption grew 0.6% over the previous quarter, which was down from Q3’s 1.2%. While private consumption growth decelerated from Q3’s 1.4% to 0.6% in Q4, government consumption inched up from Q3’s 0.4% expansion to a 0.6% rise in Q4. Fixed investment slowed notably to a mild 0.3% growth in Q4 (Q3: +3.0% qoq). The external sector improved as exports rebounded from a 0.1% contraction to 6.1% growth in Q4. Imports grew 3.0% (Q3: +0.3% qoq). Consequently, the external sector’s net contribution to overall economic growth turned around from minus 0.1 percentage points in Q3 to plus 0.7 percentage points in Q4.

FocusEconomics Consensus Forecast panelists expect the economy to grow 2.9% in 2015, which is unchanged from last month’s forecast. For 2016, the panel sees the economy expanding 2.5%.

Author: Teresa Kersting, Economist

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New Zealand GDP Chart

New Zealand GDP Q4 2014

Note: Quarter-on-quarter changes of seasonally adjusted GDP in %.
Source: Statistics New Zealand and FocusEconomics Consensus Forecast.

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